Sky boss says streaming & on-demand content promises new profits

Investment in connected services such as NOW TV is helping Sky’s growth.Launching internet streaming service NOW TV has allowed Sky to unlock “new and profitable” customers, the firm’s boss said on Tuesday.

First launched in July 2012, NOW TV offers low-cost, subscription free access to Sky’s movie, sports and entertainment channels via a dedicated set top box and apps on games consoles, smart TVs and tablets.

Despite UK subscriptions to its satellite service thought to be slowing, Sky has been able to use the new service to deliver continued growth by appealing to homes who don’t want a traditional pay-TV subscription.

Speaking at the Media and Telecoms Conference, Sky CEO Jeremy Darroch said NOW TV and similar offerings in Italy and Germany meant the group is now able to appeal to “the needs and preferences of people who like our content but want to consume it in a different way.”

He told delegates: “In the UK, NOW TV is gaining real traction as part of our approach to segmenting the market. It’s targeted at a very different kind of customer to Sky, with a distinctive proposition and cost model.

“The acceleration in our customer growth shows that the two brands are working well together, unlocking new and profitable sources of demand.”

German and Italian customers have access to Sky Online and Darroch said work was underway to “make our own streaming box an important part of the offering, building on the success of the NOW TV box in the UK.”

Darroch also highlighted how the Sky Store, a digital rental and buy to keep store, “is opening up entirely new sources of revenue.”

With ever-growing numbers of Sky customers connecting their set top boxes to the internet, Sky now has the opportunity to share the annual £1.6bn digital downloads market.

According to Darroch, Sky Store “was responsible for around a third of all digital HD sales of X Men: Days of Future Past, one of the biggest titles of 2014.”

He said the store was “a great example of how we are using our skills in innovation to position the business for an important and growing trend, reinventing our distribution model for the future and entering a new market to build entirely new revenues at scale.”